Qualcomm’s chairman steps down, and Intel reportedly considers acquiring Broadcom
Qualcomm Inc. longtime executive Paul Jacobs is taking a reduced role on the company’s board of directors — a move likely aimed at appeasing angry shareholders as the San Diego cellular giant tries to fend off a hostile takeover from Broadcom Ltd.
Meanwhile, rival chipmaker Intel Corp. — not eager to compete with the combined might of Broadcom and Qualcomm — is thinking about bidding to acquire Broadcom, the Wall Street Journal reported Friday, citing unnamed sources.
Intel hopes Broadcom will fail in its effort to take over Qualcomm, but if Broadcom looks likely to succeed, Intel might try to buy Broadcom, the Journal said. That tie-up would be huge: Santa Clara, Calif.-based Intel’s market value is $244 billion, and Broadcom’s is $104 billion.
Alternatively, the Journal said, Intel might make other, smaller acquisitions.
Qualcomm, pushing against Broadcom’s bid, announced a boardroom shuffle Friday. It said Jacobs — son of Qualcomm co-founder Irwin Jacobs and the company’s chief executive from 2005 to 2014 — will no longer serve as executive chairman of the company or chairman of its board of directors. He will remain a member of the board.
Jeffrey Henderson, who joined Qualcomm’s board in 2016 after activist shareholder Jana Partners’ efforts to change Qualcomm’s corporate governance and structure, will become chairman. The executive chairman post will be eliminated.
Broadcom is trying to gain control of Qualcomm’s board as part of a $117-billion hostile takeover bid. It has made Qualcomm’s stock performance over the last four years the centerpiece of its campaign that it would do a better job of managing the company.
The argument appears to be resonating with Qualcomm shareholders.
Bloomberg has reported that Jacobs and Chief Executive Steve Mollenkopf were among the lowest vote-getters in early stock holder balloting for the company’s board.
The six Broadcom-nominated candidates were leading the vote count for Qualcomm’s 11-member board. About half of shareholders have cast ballots.
“There is a lack of faith, especially among institutional investors, in Qualcomm’s senior management,” said Jim McGregor, principal analyst with Tirias Research. “So either senior management needs to step up and be seen as visionaries in the industry … or senior management needs to be changed.”
Qualcomm shareholders were expected to wrap up voting last Tuesday. But the multi-agency Committee for Foreign Investment in the U.S. ordered a 30-day delay so it could investigate the proposed takeover of Qualcomm.
Broadcom is based in Singapore but is moving its headquarters to the U.S., which is expected to be completed in May.
Still, the foreign investment committee and members of Congress have raised concerns about the takeover of Qualcomm threatening national security and U.S. competitiveness in 5G and other advanced technologies.
Broadcom sent a letter to Congress on Friday pledging to continue investments in 5G and other advanced wireless technologies if it acquires Qualcomm to maintain American technology leadership.
Jacobs has been chairman of Qualcomm’s board since 2009. During his tenure as chief executive, Jacobs navigated legal challenges to Qualcomm’s licensing business by Nokia and spent heavily on 4G technology research during the 2008 economic downtown, which resulted in the company having a substantial lead on competitors on faster 4G LTE networks from 2010 to 2014.
Jacobs also placed expensive bets on technologies that didn’t pay off — such as low-power display screens for smartphones and tablets that never caught on. Still, he was viewed as a visionary as Qualcomm’s CEO.
Henderson was chief financial officer of Cardinal Health Inc. from 2005 to 2014. Before that, he held management positions at Eli Lilly and General Motors. He is currently an advisory director to Berkshire Partners, a private equity firm.
Qualcomm also announced that it has extended its tender offer for NXP Semiconductors, a Dutch automotive chip maker, until March 16. The $43-billion deal has been approved by eight global regulators but is still awaiting approval from China. The company also raised its quarterly dividend from 57 cents a share to 62 cents per share.
Qualcomm’s stock rose 2% to $63.03 on Friday. Broadcom shares rose 2.8% to $253.78.
Freeman writes for the San Diego Union-Tribune. Times staff writer Lauren Raab contributed to this report.
UPDATES:
3:25 p.m.: This article was updated with a report about Intel and with stocks’ closing prices.
This article was originally published at 10:20 a.m.
